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MUMBAI : Ola Electric Mobility, the two-wheeler maker controlled by Bhavish Aggarwal, is in talks to raise as much as $1 billion from strategic and financial investors, two people aware of the matter said.

The company has hired investment bank JPMorgan, which has reached out to several large private equity funds for the investment, the people said on condition of anonymity as the talks are private.

In July, Ola Electric raised $100 million from state-run Bank of Baroda to finance the first phase of construction of what the company claimed would be the world’s largest electric two-wheeler factory.

“While the company has a comfortable liquidity position currently, it will need to ensure a comfortable debt-to-equity ratio to fund expansion and gain market share in the tightly contested electric two-wheelers space, which is expected to see a plethora of new launches,’’ said one of the two people cited above. “The company also wants to keep dry powder ready to pursue acquisitions in the space," the first person added.

Some of the existing investors may sell a part of their stakes in the forthcoming funding round, the second person said.

Emailed queries to a spokesperson of Ola Electric remained unanswered until press time on Thursday. A spokesperson for JPMorgan in India declined to comment.

On 15 August, Ola Electric unveiled its S1 and S1 Pro electric scooter models, taking on rival startups and established automakers such as Ather Energy, Bajaj Auto and TVS Motors. The company launched the scooters at 99,999 for the base variant, while the top variant is priced at 1.3 lakh. The first phase of its scooter plant will be operational soon, rolling out 2 million electric scooters annually in the initial phase. The mega factory will serve as Ola’s global manufacturing hub for a range of electric two-wheelers to be sold in India and international markets such as Europe, the UK, Latin America, Australia, and New Zealand.

Ola Electric Mobility was set up as a fully owned unit of ride-hailing startup Ola in 2017. Subsequently, co-founder Aggarwal bought out a majority stake in the unit from parent ANI Technologies Pvt. Ltd. The company then raised about $250 million from SoftBank Group Corp. and became one of the fastest firms to become a unicorn in 2019. Before the SoftBank round, the company raised 400 crore from Tiger Global Management and Matrix Partners India, which, like SoftBank, are large minority investors in Ola’s parent ANI Technologies Pvt. Ltd. In 2020, Ola acquired Amsterdam-based electric scooter maker Etergo, with plans to launch its own version in 2021.

In a research report last year, India Ratings and Research (Ind-Ra) said the covid pandemic is expected to delay the penetration of electric vehicles (EVs) in the Indian automobile industry, with affordability being one of the major impediments. However, two-wheelers, especially scooters, could see faster adoption, along with buses and three-wheelers, while passenger vehicles may take longer.

The report added that underlying challenges in the adoption of EVs, such as higher battery cost and reliance on imports, would prevail in the medium term. Mint reported on 13 August that Tata Motors is in talks with buyout funds to raise as much as $1 billion for its new EV arm, valuing the business at nearly $7 billion.

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